Inflation glides up to 7.61 per cent

Inflation rose by 0.1 per cent to over 41-month high of 7.61 per cent in the week which ended on July 31. The hike in the rate is mainly due...

Inflation rose by 0.1 per cent to over 41-month high of 7.61 per cent in the week which ended on July 31. The hike in the rate is mainly due to a surge in the prices of fruit, vegetables, edible oil and other manufactured products.

However, the present rate of inflation does not capture the impact of the increase in petrol and diesel prices which was announced on July 31. This will be reflected in the data for the week ended August 7.

The wholesale price index was up by 0.2 per cent to 186.6 during the week mainly due to higher prices of primary articles and manufactured products, although fuel prices remained the same.

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However, the rise in the inflation was much less than anticipated. In fact, the RBI re-introduced the overnight fixed rate repo at 4.50 per cent under its liquidity adjustment facility (LAF) with effect from August 16, 2004, and until further notice. The move came following a phase of temporary tightness in inter-bank liquidity. Prices of government securities reacted positively to this move. Prices of select papers rose Rs 1.30.

A look at the details of inflation data showed that primary articles index was up by 0.4 per cent to 191.7 during the week as prices of food items went up by 0.4 per cent while non-food items were costlier by 0.2 per cent.

Food article group index rose to 186.7 as prices rose for tea, maize, bajra (3 per cent each), urad and fish-inland (2 per cent each), wheat, gram, masur, moong, fruits and vegetables (1 per cent each). However, ragi was cheaper by 2 per cent.

Non-food articles group index was also higher at 195.3 due to costlier fodder (7 per cent), niger seed (3 per cent), rape and mustard seed (2 per cent) cotton seed, raw cotton, raw tobacco and gingelly seed (1 per cent each).

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However, prices fell for raw rubber (7 per cent), sunflower (4 per cent), raw silk (2 per cent) and castor seed (1 per cent). Fuel, power, light and lubricants index stood firm at 274.4, which was higher than 249.5 a year ago.

Manufactured products index rose by 0.2 per cent to 165.2 from 164.9 mainly due to rise in prices of food products, tobacco, paper, chemicals, metals, machinery and transport equipments.